Health and fitness in the US is a $30 billion industry. And it is a booming one, with annual growth of at least 3-4% over the past ten years. You can hardly walk down a single city block now in cities such as Boston, New York, and DC without spotting one or two boutique fitness studios.
Boutique fitness is different from your average everyday gym like Planet Fitness and Crunch, with prices below $20 per month, but it also differs from luxury gyms such as Equinox, where members can pay upwards of $200 per month for perks that include Kiehl’s products in the locker room and refreshing eucalyptus towels. Instead, a boutique fitness studio can be identified as a smaller gym (usually between 800 and 3500 square feet) that prioritizes community-focused group exercise of a specific fitness type.
This could include rowing, cycling, yoga, bootcamps and HIIT (high-intensity interval training) workout structures, and boxing, etc. (There are even stretching studios now!) Within a fitness type, it gets even more granular. For example, a rowing studio could offer rowing for kids and rowing for marathon runners, in addition to their regular rowing classes. There are even companies such as ClassPass, which partners with different kinds of studios, allowing members the opportunity to try different types of classes on a flat-rate monthly billing structure.
Although prices seem astronomically high (often coming in between $20-40 per single 50-60 minute class), the argument can be made that the workout is more effective and better than a cheap, but dormant membership to the gym around the corner. One of the popular studios, Barry’s Bootcamp, which combines cardio with weight training, is actually trademarked (!!) as “The Best Workout in the World.” Their website advertises the science behind the class that allows you to burn up to (or over) 1,000 calories in just a 50 or 60-minute class session. Not only is the workout quicker and more efficient, but with draconian cancellation or no-show policies and fees, you are less likely to miss a class.
Boutique studios also offer the chance to get to know the instructors and the regulars around you, which can help you feel comfortable if you’re reentering the fitness scene after an injury, pregnancy, or other extended absence. With a small space and small class size, instructors can correct form and personalize the experience a bit more. It’s almost like having a personal trainer at a reduced price point. Many of these studios offer nice shower products and made-to-order protein shakes, striving to create an environment that will have you never wanting to leave, or at the very least, have you not wanting to return to your regular neighborhood gym. It can offer a refuge from the stress of high-pressure corporate America (here’s looking at you, big law!).
The entrepreneurs in this sector that are driving the “craze” seem to be expert curators or at least, very adept at hiring a marketing team that knows their audience and aims to please. I listened to two episodes of Guy Raz’s “How I Built This” podcast on NPR, to get some more insight on entrepreneurs in this space, and why they founded their own fitness companies.
The first episode I listened to featured Elizabeth Cutler and Julie Rice, founders of the stationary bike studio, SoulCycle. They originally founded the studio because no existing gym classes really appealed to them; they didn’t have a niche that they liked, but they still wanted to work out and stay active. The business grew and scaled from their first studio in New York in 2006 to about 90 studios today in the US and Canada. The popular fitness studio has “cultivated a near-tribal devotion among its clients.” When they sold the business to a larger company, they each made $90 million.
The second episode featured another multimillion dollar company, Barre3. Founded by Sadie Lincoln in 2008, the company is based around a fitness class that blends ballet, pilates, and yoga. The company has since expanded to 33 states. Lincoln was inspired to found a barre studio because she found herself working out every day, running on the treadmill and counting calories, but not really feeling the benefits. Thinking that the current fitness options were failing her and assuming that others felt the same way, she set out to change that.
It seems as if a common motivation amongst these founders and entrepreneurs in the fitness space is to turn exercise classes into something that would be motivational and aspirational for clients. Exercise classes do not always have to feature an instructor who screams and swears like a bootcamp sergeant, but can instead focus more on energy and wellness. These founders also recognize that each class can be made better, focusing on each hour, instead of the flat-rate membership at a regular gym, where you won’t necessarily feel compelled or want to go.
Although many of the predictions are rosy for boutique fitness, one consumer analyst noted another cycling studio’s recent price cuts as a precursor of things to come for the industry. Competition is growing. And not just from the studio two blocks away. Luxury at-home workout options like Peloton (giving you the option to work out in the comfort and convenience of your own home) could also present a significant threat.
Questions to Consider:
- Is the boutique fitness “craze” a bubble that is going to burst in the next few years or is it truly the workout of the future? In other words, is this still an Entrepreneur’s Paradise or is it already becoming an oversaturated market?
- Will the studios eventually have to lower margins and modify some of the draconian cancellation policies to compete, both with other studios and with at-home fitness options such as Peloton? Or do these options appeal to different types of consumers entirely?
- Will boutique fitness affect the healthcare industry, specifically insurance? Should employers be willing to cover or subsidize the costs of boutique fitness classes versus a regular gym?
- Can we see future partnerships with fitness-tracker companies such as Fitbit and Whoop, etc.?
- As Courtney mentioned in her post/discussion last week, are some of these companies trying to “do too much” and where is the line?
Sources & Additional Interesting Reads:
https://www.npr.org/2018/12/21/679320471/soulcycle-julie-rice-elizabeth-cutler
https://www.npr.org/2018/11/01/663028736/barre3-sadie-lincoln
https://www.vox.com/the-goods/2019/1/11/18176929/flywheel-soulcycle-peloton-spinning-bubble-cycling-class
https://www.bloomberg.com/news/articles/2018-02-28/spinning-craze-nears-peak-as-nyc-price-cuts-signal-oversupply
https://www.winston.com/en/advertising-marketing-privacy-law-news/soulcycle-settles-gift-card-class-action.html
https://www.forbes.com/sites/benmidgley/2018/09/26/the-six-reasons-the-fitness-industry-is-booming/#70333e7f506d
https://www.nasdaq.com/article/what-is-boutique-fitness-and-how-can-investors-profit-cm1014364
https://www.barrysbootcamp.com/best-workout/
Many industries in the US are highly regulated, often by both the state and federal governments. This can create significant problems when someone tries to do something new in them. When trying to innovate in such environments, one is faced with how to balance charging ahead with the idea and waiting to ensure that no government hammer is about to drop. What one person calls a great innovation can sometimes be dangerously close to what another would call illegal activity. If that other person is a government regulator then the innovator could be in big trouble. However, waiting to determine the legal landscape risks losing valuable time and money to competitors.